"Coalition tensions over what could be a crushing victory for the no campaign in Thursday's referendum on the alternative vote have exploded into extraordinary scenes in cabinet , with the Liberal Democrat energy secretary, Chris Huhne, confronting David Cameron and George Osborne over campaign leaflets that he believed smeared Nick Clegg. During the ensuing row, Osborne said he was not going to be challenged by a cabinet colleague acting as if he was "Jeremy Paxman on Newsnight"." - The Guardian | The Daily Mail

"Lib Dem frustration at the AV campaign was underlined last night with a new poll showing a 32% lead for those backing the current first-past-the-post system. The ComRes poll for The Independent put the “no” campaign ahead by 66% to 34% among those certain to vote." – The Times (£)

"ComRes has a new poll in tomorrow’s Independent, presumably their final call for the AV referendum. Topline referendum voting intention taking into account likelihood to vote and excluding don’t knows and won’t votes stands at YES 34%, NO 66%. 32 points is by far the largest lead we’ve seen for the NO campaign, up from 20 points in the last ComRes poll a week ago." – UK Polling Report

"Mr Clegg said: “The first phase of this Coalition – the first year, as we were making really difficult decisions on the deficit and so on – required real collective discipline. But over time, inevitably, the different identities, different values of the two parties – because we are different parties, always have been, always will be – would kind of come out in the wash a bit more. And that is probably happening in part because of this referendum,” he added." - The Herald

"Nick Clegg is out of his depth – and David Cameron should let him sink"

"Opinion polls now suggest the SNP will stay in power tomorrow, following a pitiful campaign by a third-rate Labour team. For Labour to be so undermined in one of its heartlands would further enhance Mr Cameron's opportunity. After all, an outbreak of headless chickenism among the Lib Dems such as we should expect to see after tomorrow would make it very hard for anyone to believe this Coalition will last four more years. To judge from Mr Huhne's reported attack on the Prime Minister at Cabinet yesterday it may not last four more weeks. Mr Cameron must start laying down the law: no more constitutional change, for which there is clearly no public appetite; and no more Cableism holding back what is really needed to revive our economy: a further shift of resources from the unproductive to the productive sectors. That may put a volley of nails into Mr Clegg's coffin, but, rather than keep whining, he should think himself lucky to have got away with it for so long." – Simon Heffer in the Daily Telegraph

Public service reform "scaled back"

"Leaked documents suggest ministers have decided the "wholesale outsourcing" of public services to the private sector would be politically "unpalatable". Ministers instead want to use more charities, social enterprises and employee-owned "mutual" organisations." - BBC

"A leaked memo of a meeting between business chiefs and the minister for the Cabinet Office, Francis Maude, says there will be "no return to the 1990s" and wholesale outsourcing. Maude is preparing a white paper on public services – delayed since February – setting out the future direction of public services, which is expected to contain plans to match private sector companies to charities and volunteer groups to run public services." - The Guardian

"Instead private sector involvement would be limited to joint ventures with not-for-profit groups or mutualised public sector organisations. “Government… was very interested in turning existing services into government companies. These would avoid the downsides of ‘hassle’ and adverse political reaction.”" – The Times (£)

Andrew Lansley to be replaced as Health Secretary?

"Health experts have been called in for a breakfast meeting with Paul Bate, David Cameron’s new special adviser on healthcare, prompting fresh speculation on Tuesday that Andrew Lansley, the health secretary, is being sidelined." – The Financial Times (£)

"Over the cheap coffee served at their meetings – the days of a whisky in grand clubs are long gone – the permanent secretaries believe Lansley is now a liability as David Cameron and Nick Clegg attempt to strike a difficult balance on the NHS." – The Guardian

David Cameron says Pakistan has 'lots of questions' to answer – Daily Telegraph

Cameron also hints at earlier Afghan exit if bin Laden’s death leads to stability

"David Cameron raised the prospect of a British withdrawal from Afghanistan earlier than 2015 yesterday, talking of the possibility of a “more rapid solution” to the long-term conflict. The Prime Minister insisted that Britain’s strategy was straightforward and had not changed because the death of Osama bin Laden. But he told Parliament that he had spoken to President Karzai and that both leaders agreed that bin Laden’s removal provided a “new opportunity for Afghanistan and Pakistan to work together to achieve stability on both sides of the border”." - The Times (£)

"The UK Government last night defended its £350 million a year aid programme to Pakistan as questions were raised over why British taxpayers were giving so much money when Osama bin Laden found a safe haven there for so long." – The Herald

Town halls cut just 17,000 jobs in two years

"Town hall chiefs have cut only a tiny handful of jobs during two years of deep recession and soaring public debt, new figures showed yesterday. Despite threats from council leaders that they will have to shed 140,000 jobs this year, their own analysis said they have managed to get rid of the equivalent of fewer than 17,000 full-time posts over the past two. The trimming has made little impression on the overall town hall workforce of nearly 1.7 million people." – Daily Mail

Coalition in brief

"Chief executives are expected to tell the energy select committee that the tax will close down fields early and mean the majors find it difficult to sell older fields to new owners." – Daily Telegraph

"The threat of high unemployment makes it “common sense” to consider fresh European immigration controls, Nicolas Sarkozy said yesterday." – Daily Express

"Plans to replace the Education Maintenance Allowance could lead to unintended discrimination, according to a government equalities assessment." – BBC

Mrs Thatcher's hard-working Britain

"Britain is the only country whose people work harder than they did in the 1980s, an international study has found. Margaret Thatcher’s workplace revolution has seen Britons working more hours per week than when she was in Number Ten. The former Tory prime minister’s success at cracking down on union restrictive practices and freeing the country’s entrepreneurial spirit means we work much harder than we used to. Meanwhile, across Europe, people now work fewer hours than they did in the 1980s." – Daily Mail

No rate rise until next year, say economists

"Disappointing manufacturing output figures for April have virtually ruled out any chance of Bank of England policymakers raising interest rates at their meeting starting today. The Markit/Cips index of factory output fell well below the most pessimistic analyst's forecast for last month. A sharp fall in the growth of new orders reinforced the picture of a manufacturing boom fading after near-record growth at the turn of the year." – The Independent

"Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club, said the odds on a Thursday rate rise – when the Bank of England's Monetary Policy Committee makes its next interest rate decision – were "very long"." – Daily Telegraph

"Dunfermline and West Fife MP Thomas Docherty has condemned the actions of Dunfermline Athletic's mascot Sammy the Tammy prior to the weekend local derby with fierce rivals Raith Rovers, describing them as "unnecessary"." - The Courier

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